EBRD to provide nearly $250 million loan to Uzbekistan

On November 20, an interim session of the Council of Foreign Investors under the President of Uzbekistan, organized by the Ministry of Investments and Foreign Trade together with the European Bank for Reconstruction and Development (EBRD), was held in Tashkent.

The session was attended by the Minister of Investment and Foreign Trade Sardor Umurzakov, the EBRD MD for Central Asia B. Balvanera, the Head of the EBRD Representative Office in Uzbekistan A. Drakinos, representatives of the World Bank, International Finance Corporation, Asian Development Bank, Islamic Development Bank, Heads of the State Assets Management Agency, the Ministry of Economy and Industry and the Central Bank of Uzbekistan.

Also, leaders of foreign companies engaged in or planning to carry out investment activities in Uzbekistan, such as British American Tobacco (Great Britain), JP Morgan Chase (USA), CNPC (China), KNOC (South Korea), Lukoil (Russia), Knauf ( Germany), Carlsberg (Denmark) Posco Daewoo (South Korea) and others were present at the event. In addition, experts from international consulting agencies - Ernst & Young, KPMG, Deloitte, Pricewaterhouse Coopers, Dentons and media representatives were invited.

The main task of the Council of Foreign Investors is to directly participate in creating a favorable investment climate and effective mechanisms to stimulate domestic and foreign entrepreneurs to invest in priority sectors of the economy, as well as regions of the country, with the aim of organizing technological production for the manufacture of competitive export-oriented products.

The session was held in the form of an open discussion, during which issues of improving the interaction between investors and government bodies, creating favorable necessary legal, regulatory and institutional foundations of the privatization process, improving the valuation methodology and corporate legislation were discussed.

Opening the event, the chairperson of the session Umurzakov noted the importance of creating a healthy and transparent business environment, built on an atmosphere of trust, contributing to the implementation of innovative ideas and promising business initiatives, which in turn will provide an important advantage in the face of intense international competition to strengthen Uzbekistan’s position in global investment flows.

On behalf of the Government, he voiced firm intentions to continue consistent work to improve the legislative framework, remove excessive administrative barriers and develop infrastructure. He also urged the participants to focus on reforming the banking-financial sector, accelerating the privatization of state property and introducing objective methods of valuing assets, which at this stage of economic transformation will significantly increase the investment attractiveness of Uzbekistan.

Representatives and consultants of the EBRD, highly appreciating the confidence and dynamism of the changes being carried out in the country, noted the positive trend of growth in investment activity in the countries of the Central Asian region against the background of a decrease in global foreign direct investment over the past three years.

In his speech, the EBRD Advisor G. Kvirikashvili shared his vision of the prospects for further activities of the Council – the structure will be transformed into an open platform for discussion and study of pressing issues of foreign investors. Further, based on the specifics of incoming requests, with the direct coordination of the Council Secretariat, working groups will be created to study specific cases and develop solutions. This format will considerably increase the practical significance of the Council.

Also during the session, members of the Council, foreign entrepreneurs, shared their views on the role of this structure both on a national scale and in the context of their personal participation in the implementation of projects in Uzbekistan.

As part of the event, a number of constructive proposals related to agenda issues were put forward and considered. In particular, introducing the definition of “holding company”, the concept of “through taxation”, various classes of shares and other common corporate law concepts into the legislation of Uzbekistan was proposed.

Following the event, loan agreements were signed between the Republic of Uzbekistan and the EBRD on the following projects for $246.1 million:

- construction of a 177 km long 220 kV transmission line from the Navoi Thermal Power Station to the 220 kV Besopan switching point (loan amount is $96.1 million, the executive agency is the National Electric Networks of Uzbekistan JSC);

- reconstruction and construction of sewage systems in the city of Karshi, Kashkadarya region (loan amount is $60 million, the executive agency is the Ministry of Housing and Public Utilities);

- reconstruction and construction of sewage systems in the cities of Urgench, Khiva and Pitnak, Khorezm region (loan amount is $90 million, the executive agency is the Ministry of Housing and Public Utilities).